Surfing a wave of economic growth
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ACDE Seminar
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Does geography affect the location and pace of economic growth? While there is extensive evidence that some natural advantages are important, like rivers, ports and resource endowments, evidence on the role of natural amenities remains mixed. This paper estimates the economic impact of a particular natural amenity, surf breaks, in three natural experiments. The first finds that economic activity, proxied by nighttime lights, grew by 0.4 per centage points p.a. more near 4-star breaks than 1-star breaks from 1992-2013, and the effect is concentrated in nearby towns and emerging economies suggesting both path dependence and institutions are important. This is worth up to $2.45 million per break per year. The second finds that discovering (or losing) a high-quality break raises (lowers) growth by 2.2 per centage points p.a.; and the invention of heated wetsuits raised growth near high-quality cold-water breaks by 2.6 per centage points p.a. The third shows that during El Niño years, famed for good surf, an unanticipated increase in average wave height of 1 standard deviation increases growth near 4-star breaks by 5.6 per centage points relative to 1-star breaks.
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